Sir Martin Sorrell has almost halved the full-year growth forecast for WPP in the past two months, as events such as the London Olympics failed to live up to expectations and he predicted a tougher than expected fourth quarter.

WPP, the world's largest marketing services company, reported like-for-like revenue growth of 1.9% to £2.5bn in the third quarter.

Investors took fright at the downgrade, with WPP the biggest faller on the London Stock Exchange in early trading. The share price was down almost 5% at 772.75p.

It is the second time in as many months that Sorrell has cut WPP's revenue expectations. In August, he trimmed the forecast from 4% to 3.5%.

Sorrell said that growth was softer in the third quarter than the first six months of the year – when it was running at 3.6% – particularly in September and across North America and continental Europe.

Advertising remained the strongest performer for WPP. Growth slowed in research and PR, but Sorrell said that the big events had not fuelled growth as expected.

"The UEFA football championships in central and eastern Europe, the summer Olympics and Paralympics in London and last, but not least, the US presidential elections in November did underpin industry growth but not, perhaps, as much as was thought," he said.

"Money [was] switched from existing budgets, particularly in the cases of the UEFA championships and Olympics".

Like-for-like revenues shrank 0.4% in North America in the third quarter, while western continental Europe dived 2.1%.

The Olympic effect may not have delivered globally, but it did in the UK with revenues up a healthy 4.7% in the third quarter.

This was well ahead of WPP's previous forecast and the 3.5% delivered in the second quarter.

The rest of the world grew revenues by 6.8%.

Sorrell also said that an early look at WPP's new forecasts showed a further slowing in revenue growth in the fourth quarter.

The slowdown was particularly marked in North America, continental Europe and Latin America.

Sorrell also said that WPP expected to make more than $100m (£62m) from the sale of its stake in Buddy Media, the social media branding specialist that WPP took a $5m stake in in 2010, and the sale of the Madison avenue New York headquarters of ad network Young & Rubicam.

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